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The World Happiness Report has just been released and when we actually read through it, rather than just the press releases, we find that the main authors, Jeff Sachs and Richard Layard, don't really believe the basic thesis themselves.

That basic thesis is that economic growth doesn't really improve happiness, we really ought to be worrying about human happiness and thus we should concentrate on things other than economic growth. The problem with this is that their own report shows that the absence of economic growth most definitely makes people unhappy: therefore we should indeed strive for economic growth in order to make people happy.

It is, of course, possible to be trite about such reports and since I enjoy being so I shall. We can see that the US comes 11 th in the listing of happy countries. All of the countries above the US have a lower corporate income tax rate than the US. Thus the secret to happiness is to have a lower corporate income tax rate. That is trite though, for all OECD countries now have a lower than the US corporate income tax rate so perhaps that's not really the reason.

As basic background we have the Easterlin Paradox. Yes, higher incomes make people happier but richer countries don't seem to be happier in aggregate as a result of such higher incomes. So, therefore economic growth isn't the secret to the desired increasing of happiness.

However, there's a serious problem with this observation: when we go and look at what it actually is that makes people happier we find that what does make people happier are the things that lead to that economic growth which we think doesn't make them happier. Take this (page 66) for example:

Unemployment When people become unemployed they experience sharp falls in well-being and their well-being remains at this lower level until they are re-employed.33 The estimated effect is typically as large as the effect of bereavement or separation, and the unemployed share with these other experiences the characteristic of ceasing to be needed. The Appendix to this chapter documents that unemployment reduces well-being in all the datasets analyzed. It also shows that the main impact of unemployment on well-being is not through the loss of income, but rather through loss of social status, self-esteem, workplace social life, and other factors that matter.

So in order to increase happiness we want to get as close to full employment as we can. However, there's a little acknowledged point about such full employment. In order to maintain it we must have economic growth. This is because technology.

"Because technology" sounds trite but I'm afraid it isn't. By technology here we do not mean just shiny electronic gewgaws: we mean all of the new knowledge that pours into the world each year about how we can do things better. From exciting new methods of turnip weeding through how we might lay out a bricklayers' workspace to reduce effort and increase output to robots making cars and the distressing manner in which smartphones have entirely destroyed the telegraph business.

A general observation is that this onward march of technology increases labour productivity by some 1-2% a year. We don't really have a hugely accurate estimate of it, unfortunately, as we calculate it in general by summing up everything else we can think of and calling the last bit we cannot explain, the residual, improved productivity. But we do know that it is there: Bob Solow once calculated that this technological progress (which is more than just improved labour productivity to be sure) accounted for 80% of the western world's growth in the 20th century.

This is where our unemployment problem comes in. As we curious shaved apes play around with stuff and work out new methods of doing things we reduce the amount of labour necessary to provide any given level of production. However, we're also saying that unemployment leads to great unhappiness. So what are we to do with this newly surplus labour? If we keep production levels static then we're going to end up with 1-2% of the available labour being entirely redundant each year. After 50 years we've (without compounding) some 50% of the available workforce entirely without jobs and yes, I think we would all agree that that would lead to a deeply unhappy society. Certainly my old Professor, Richard Layard, who wrote this chapter would think so for he says that unemployment is a source of deep unhappiness. To the point that almost any job is better than no job.

But wait! What happens if we employ this newly surplus labour to do something so that it is happier? Well, then we've got our previously static output plus the output from this not anymore redundant and newly employed labour. And what is it that we call increased output? Yes, that's correct, we call it economic growth.

Which brings us to the failure of the idea that economic growth doesn't improve happiness. For as even the authors of this report insist, the things that make people happier are the things that lead to economic growth.

Among the more “external” factors, key determinants of happiness include: • income • work • community and governance, and • values and religion and, among the more “personal” features, key determinants include: • mental health • physical health • family experience • education, and • gender and age

You can trawl through the economics papers yourselves to measure the truth of this next statement: near all of those determinants of happiness are positively correlated with economic growth. There are reams of papers showing that the physical and mental health of a population are important for economic growth, the better both are the more growth there will be. I'm sure I've seen Jeff Sachs argue that illnesses like malaria are reasons why some places don't grow. Education is urged as the solution to the advanced countries' currently sluggish growth, we certainly talk about the way in which demography (that's the age and gender bit) influences growth. Community and governance: vast swathes of the literature are about how institutions, the presence or absence of corruption (even the type of it) influence growth.

All of which is something that I'm afraid I find vastly amusing. We have here this insistence that economic growth does not make us happier. Yet when we examine the things that do make us happier we find that they're pretty much the list of things which encourage economic growth. In one instance at least, unemployment, we find that we must absolutely have economic growth in order to eliminate this source of unhappiness.

All of which leaves the basic thesis really rather threadbare. We might say that economic growth is the outcome of our being made happy. We might also say that it is the process of economic growth itself that makes us happy, not the level of wealth that we enjoy as a result. But the thesis that we shouldn't have economic growth but should instead concentrate on what makes us happy seems to be refuted by this very report which makes that very claim. For near everything they tell us about what makes us happy is positively correlated with that economic growth they wish to dismiss as being correlated with happiness.